Parents On Facebook To Blame For Stock Price Woes, Analyst Says

Teni Sow | July 31, 2012

It was another poor showing for Facebook last week as its stock price hit a new low Friday, dispiriting shareholders already frustrated by lower-than-anticpated profits.

Billions in shareholder value was erased as the market value of Mark Zuckerberg’s flagship fell to nearly half of the $104 billion target set in May when the company went public, the Mercury Newsreports.

But as theories abound over what exactly ails the social networking behemoth, one analyst blames an unexpected group: parents.

“Kids are spending less time on Facebook, as their Parents are also now on the Facebook,” Trip Chowdry, managing director of equity research at Global Equities Research, LLC, wrote in an email to CNN. “It is a psychological reality, that after a certain age, Kids are less inclined to hangout where their Parents are.”

In April, Facebook surpassed the 900 million active-user mark. But while the number of users that engaged the site at least once a month continued to grow in the first quarter of 2011, the growth rate is noticeably slowing down.

However, Facebook isn’t the the only company struggling.

Social games superstar Zynga, music streaming site Pandora and daily deal website Groupon are all currently trading below their public offering price. Collectively, investors have lost $39 billion since those companies — including Facebook — went public, CNBC reports.

So can Facebook redeem itself in the eyes of the America’s youth? Probably not, according to Chowdry.

“FB may be cool again for the Younger people, if FB bans Parents from FB, but that is impossible,” he wrote in the email. Instead, Chowdry predicts users will find a new place to “hangout.”

In February, the Associated Press reported that many teens, fed up with friend requests from parents, uncles and grandparents, have begun to rely more heavily on Twitter for their social networking needs.

“I love twitter, it’s the only thing I have to myself … cause my parents don’t have one,” Britteny Praznik, a 17-year-old who lives outside Milwaukee, was quoted as tweeting.

Twitter accounts are more anonymous than Facebook profiles; they are easy to use, and the 140 character limit is similar in length to the average text message, the Associated Press notes. In addition, the more fluid set-up and ability to easily manage several accounts makes it easier to avoid people some would rather not interact with in their digital space.

 

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